CHAPTER-6 FII NNDDIINGGSS,, TCCOONCCLLUUSSIOONNS...

Findings, Conclusions & Suggestions Chater-6

353

CHAPTER-6

FFIINNDDIINNGGSS,, CCOONNCCLLUUSSIIOONNSS && SSUUGGGGEESSTTIIOONNSS

66..11 IINNTTRROODDUUCCTTIIOONN

66..22 FFIINNDDIINNGGSS

66..33 CCOONNCCLLUUSSIIOONNSS

66..44 SSUUGGGGEESSTTIIOONNSS


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66..11 IINNTTRROODDUUCCTTIIOONN::

Researcher in common talk refers to a search for knowledge. One can also

define research as a scientific and systematic search for pertinent information on a

specific topic. The purpose of research is to discover answers to questions through the

application of scientific procedures. The main aim of research is to find out the truth

which is hidden and which has not been discovered as yet. Accounting also is an area

of research. However, in accountancy, new ideas, new thoughts and new concepts are

time base factors. Different problems like accounting for Human Resources, Inflation

Accounting, Social Accounting, Value Added Accounting etc. are new concepts in

accounting.

Corporate sector play important roll towards shareholders, employees,

consumers, community, investors, suppliers, competitors, and government. Corporate

social responsibilities towards shareholders are interested not only in the protection of

their investment and the return on it but also in the image of the company.

Responsibility to employees the success of corporate sector depends to very large

extend on the morale of employees and their whole – hearted co-operation. Consumer

is the foundation of a business and keeps it in existence therefore corporate sector

responsible for it for it, increase productivity and reduce prices, improve quality, and

smoothen the distribution system to make goods easily available. Corporate sector

responsible for community to prevent environment pollution, contribute to research

and development, development of backward. It is responsible for investors to ensuring

safety of their investment, regular payment of interest, timely repayment of principal

amount. Responsible for suppliers to give regular orders for purchase of goods, deal

on fair terms and conditions, available reasonable credit period, timely payment of

dues. And also responsible towards government not to offer exceptionally high sales

commission to distributers, agents etc., not to offer to customers heavy discounts and

or free products in every sale, not to defame competitors through false or ambiguous

advertisements.

Accounting is a language of business. Accounting is an analysis and

interpretation of accounting records containing financial and economic information of

transactions and other events profitably to a business. To operate a business profitably

and to star solvent, profitability and solvency of a firm should be measured at regular


355

intervals in order to know the aggregate position since alarming is the art of

measuring, describing and interpreting financial and economic activities of a business,

it is essential, for an accounting system, to record, classify and summaries the entire.

Lot of events since accounting is a language of business, it should be communication

to the parties related to and integrated in its act ivies. Such communication is made

through corporate reporting process. It has assumed goat significances in recent years.

In many countries the users of such reports. There are many parties who are much

interested such as equity shareholders, lenders, bankers, financial institutions, tax-

levying authorities, regulating authorities, government and various authorities in the

accounting reporting of companies. By statutes, all the companies and corporate

entities are reporting minimum information mandatorily.

Value added reporting is part of financial reporting that shows value addition

by firms during the specific period of time and their application towards Employees,

Government, Capital providers and retained by the firm himself towards development

and expansion activities. Value added is meaningful measure of corporate

performance rather than conventional measure based on traditional financial

accounting and employees oriented, shareholders, Lenders and Government.

The selected corporate units are one of the key industries in India. It play a

dominant role in the national economy. The selected corporation units like Wipro

Tech Ltd., India‟s largest IT industry, CIPLA Ltd. Is one of the best pharmaceutical

industry in India, TATA consultancy Service Ltd., is fourth largest consultancy

service software making industry in world. Reliance Industries Ltd.,is textiles, Oil

refinery and other products producing Industry not only in India but also in world. In

developing country like India, the needs for a well established among industries are of

paramount importance. It is also important from the point of view of employment

generation and revenues to the government in the foam of taxes and excise duties, to

contribution to society.Tata Motors Ltd.is one of the leading company in automobile

sector. Bharat Heavy Electricals Ltd.is the largest engineering and manufacturing

enterprise in India in the energy related/infrastructure sector today. Since its inception

more than four decades ago, BHEL has been at the helm of indigenous Heavy

Electrical Equipment industry in India with a sustained track record of earning profit

since 1971-72. BHEL has grown in stature over the years with continued inflow of


356

orders, manufacturing prowess, continued thrust on technology leading to a strong

presence in domestic and international markets as a major supplier of power plant

equipment besides establishing substantial inroads in select segment of products in

Industrial sector and Railways. The company has realised the capability to deliver

15,000 MW p.a and the capacity expansion programme is underway to reach 20,000

MW p.a by 2012. Currently, 74% of the total power generated in the country is

through BHEL sets. BHEL caters to core sectors of the Indian Economy viz., Power

Generation and Transmission, Industry, Transportation, Renewable Energy, Defence,

etc. The wide network of BHEL‟s 15 manufacturing divisions, 2 repair units, 4 power

sector regions, 8 service centres, 15 regional offices, 1 subsidiary and a large number

of Project Sites spread all over India and abroad enables the Company to promptly

serve its customers and provide them with suitable products, systems and services -

efficiently and at competitive prices. In Indian oil Corporation Ltd. is India‟s

flagship national oil company, with business interests straddling the entire

hydrocarbonvalue chain and the highest ranked Indian corporate in the prestigious

Fortune „Global 500‟ listing. With over a 34,000-strong workforce, Indian Oil has

been meeting India‟s energy demands for over five decades. The company‟s

operations are strategically structured along business verticals – Refineries,Pipelines,

Marketing, R&D and Business Development. To achieve the next level of growth,

Indian Oil is currently forging ahead on a well laid-out road map through vertical

integration –upstream into oil exploration & production (E&P) and downstream into

petrochemicals – and diversification into natural gas marketing and alternative

energy, besides globalization of its downstream operations. Having set up subsidiaries

in Sri Lanka, Mauritius and the United Arab Emirates (UAE), Indian Oil is

simultaneously scouting for new business opportunities in the energy markets of Asia

and Africa. InInfosys Technologies Limited („Infosys‟ or „the Company‟) along

withits majority owned and controlled subsidiary, Infosys BPO Limited(„Infosys

BPO‟) and wholly-owned and controlled subsidiaries, Infosys Technologies

(Australia) Pty Limited („Infosys Australia‟),Infosys Technologies (China) Co.

Limited („Infosys China‟), Infosys Consulting Inc („Infosys Consulting‟), Infosys

Technologies S. deR. L. de C. V. („Infosys Mexico‟), Infosys Technologies (Sweden)

AB(„Infosys Sweden‟), Infosys Tecnologia DO Brasil LTDA („Infosys Brazil‟)and

Infosys Public Services Inc, USA („Infosys Public Servies‟) andcontrolled trusts is a


357

leading global technology services corporation.The group of companies („the Group‟)

provides end-to-end businesssolutions that leverage technology thereby enabling

clients to enhancebusiness performance. The Group provides solutions that span

theentire software lifecycle encompassing technical consulting, design,development,

re-engineering, maintenance, systems integration,package evaluation and

implementation, testing and infrastructuremanagement services. In addition, the

Group offers software productsfor the banking industry, business consulting and

business process management services.Steel Authority of India Limited (SAIL) is

one of the largest state-owned makers in India and one of the top steel makers in

World. With a turnover of 48,681 crore , the company is among the top five highest

profit earning corporate of the country. It is a public sector undertaking which trades

publicly in the market is largely owned by Government of India and acts like an

operating company.Oil and Natural Gas Corporation Limited (ONGC) is an

Indian multinational oil and gas company headquartered in Dehradun, India. It is one

of the largest Asia-based oil and gas exploration and production companies, and

produces around 77% of India's crude oil (equivalent to around 30% of the country's

total demand) and around 81% of its natural gas. It is one of the largest publicly

traded companies by market capitalization in India.

The present study deals with the socials performance through value added

reporting of selected units of different industries of India. The selected units are

Wipro Tech Ltd., Cipla Ltd., Tata consultancy service Ltd., Reliance Industries

Ltd.,Tata motors Ltd.,Bharat Heavy Electricals Ltd., Indian Oil Corporation

Ltd., Infosys Ltd., Steel Authority of India Ltd., Oil & Natural Gas Corporation

For analyzing the value added statement of selected units, the data relating to Wipro,

CIPLA,TCS, Tata motors, BHEL, IOC,INFOSYS,SAIL,ONGC for the past five years

viz 2005-06 to 2009-10 have been collected. The present study has been divided into

five chapters and chapter wise summary have been discussed as here below:

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Steel

http://en.wikipedia.org/wiki/World

http://en.wikipedia.org/wiki/Crore

http://en.wikipedia.org/wiki/Government_of_India


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CChhaapptteerr:: 11

CCOONNCCEEPPTTUUAALL FFRRAAMMEEWWOORRKK OOFF SSOOCCIIAALL RREESSPPOONNSSIIBBIILLIITTYY

&&

VVAALLUUEE AADDDDEEDD RREEPPOORRTTIINNGG

In this chapter divided into two parts. It is as under:

1. Conceptual Framework of Social Responsibility

2. Conceptual Framework of Value Added Reporting

There are various tools of social performance measurement in accountancy.

Out of them value added accounting is taken here. The concept of value added

defined as “Value added measures the wealth created by a business or an industry.”

The value added statement is prepared and is divided into two parts.

1. The Generation of Net Value Added

2. The Application of Net Value Added

In the statement of Generation of Net Value Added is prepared. This net value

added is distributed among employees, government, providers of capital and owners

(Retained in business). Value added statement can be prepared in two purpose viz.

Gross value added & Net value added. There are so many difficulties arise while

preparing value added statement. Finally advantages and disadvantages of Value

Added Statement are given.

CChhaapptteerr --22

AABBOOUUTT IINNDDUUSSTTRRYY

In this chapter researcher has selected following industries.

11.. WWIIPPRROO TTEECCHHNNOOLLOOGGIIEESS LLTTDD

In this includes main points as History of Wipro, Major divisions,

Highlight of company, Awards & Recognition, and Financial Highlight of

Wipro

22.. CCIIPPLLAA LLIIMMIITTEEDD..

In this industry includes main points as History of Cipla, Company

Products & Innovation, Milestones of Cipla, and Financial Highlight of Cipla

Ltd.


359

33.. TTAATTAA CCOONNSSUULLTTAANNCCYY SSEERRVVIICCEESS LLIIMMIITTEEDD..

In this industry requires main points of History of TCS Ltd., Offices &

Development Centers, Innovation and R&D and Financial Highlight of TCS

Ltd.

44.. RREELLIIAANNCCEE IINNDDUUSSTTRRIIEESS LLIIMMIITTEEDD..

In this industry mandatory points Overview of Reliance Industries

Limited, Products & Brands, Milestones of RIL and Financial Highlight of

RIL.

55.. TTAATTAA MMOOTTOORRSS LLIIMMIITTEEDD..

In this industry main point includes as History of Tata Motors,

Important Developments, and Financial Highlight of Tata Motors.

66.. BBHHAARRAATT HHEEAAVVYY EELLEECCTTRRIICCAALLSS LLIIMMIITTEEDD..

In this includes main points as Overview of BHEL, Products Profile,

Main Manufacturing Units, Board of Directors and Financial Highlight of

BHEL.

77.. IINNDDIIAANN OOIILL CCOORRPPOORRAATTIIOONN LLIIMMIITTEEDD..

In this includes main points as Overview of IOC, History of IOC,

Board of Directors and Financial Highlight of IOC.

88.. IINNFFOOSSYYSS LLIIMMIITTEEDD..

In this includes main points as History of IOC, Board of Directors,

Social Activies and Financial Highlight of Infosys Ltd.

99.. SSTTEEEELL AAUUTTHHOORRIITTYY OOFF IINNDDIIAA LLIIMMIITTEEDD..

In this industry mandatory points as Overview of Infosys, History of

Infosys, Main Units, Ownership& Management, Board of Directors and

Financial Highlight of Infosys.

1100.. OOIILL && NNAATTUURRAALL GGAASS CCOORRPPOORRAATTIIOONN LLIIMMIITTEEDD..

In this includes main points as Overview of ONGC, History of ONGC

Products Profile, Board of Directors and Financial Highlight of ONGC.


360

Chapter: 3

RREESSEEAARRCCHHMMEETTHHOODDOOLLOOGGYY

The subject of the present study is “SOCIAL PERFORMANCE THROUGH

VALUE ADDED REPORTING” – (The Empirical Study of selected corporate

units ) which covers the period of the five years from 2005-06 to 2009-10. The study

is based on secondary data published by the selected companies in their annual reports

and accounts. The main objective of the present study is to measure the performance

through value added statement of selected units. Various statistical measures like

average, growth rate Student‟s T-Test and one-way ANOVA and two-way ANOVA

have been applied to test the validity of two hypotheses namely

(1) Null hypothesis &

(2) Alternative hypothesis.

Finally the limitations of present study have also been presented.

66..22 FFIINNDDIINNGGSS

CChhaapptteerr:: 44

[[DDaattaa AAnnaallyyssiiss--II]]

AANNAALLYYSSIISS AANNDD IINNTTEERRPPRREETTAATTIIOONN OOFF VVAALLUUEE AADDDDEEDD SSTTAATTEEMMEENNTT

A study of Generation and Application of Net Value Added in selected

corporate units under study has noticed the following findings:

WIPRO TECH LTD.

Sales (X) and Gross value added (Y) of Wipro tech ltd. it is r1(x, y) = 0.9997

that shows higher degree correlation between sales and Gross Value Added.

Significance of correlation will also be tested through Student T- Test Hence,

there is significant correlation between Sales and Gross Value Added, it means

when sales increase or decrease as well as gross value added also will be

increased or decreased, there are the évident proof of company that growing

fast.The main reason is behind that company increase their service product of

software and launsh now product in global market.


361

Sales (X) and Gross value added (Y) of Wipro tech ltd. it is r1(x, y) = 0.9996

that shows higher degree correlation between Sales and Net Value Added.


there is significant correlation between Sales and Net Value Added, it means


increased or decreased. The Highest growth in Net Value Added then later

year of study is attributable to the optimum utilisation of capacities,

improvement in operating efficiencies and successful marketing of products.

CIPLA LTD.

Sales (X) and Gross value added (Y) of Cipla ltd. it is r1(x, y) = 0.98 that

shows higher degree correlation between sales and Gross Value Added.




increased or decreased.

Sales (X) and Gross value added (Y) of Cipla ltd. it is r1(x, y) = 0.97 that

shows higher degree correlation between Sales and Net Value Added.





TATA CONSULTANCY SERVICES LTD.

Sales (X) and Gross value added (Y) of TCS ltd. it is r1(x, y) = 0.9749 that

shows higher degree correlation between sales and Gross Value Added.




increased or decreased, there are the évident proof of company that growing

fast, The main reason is behind that company increase their consultancy

service, product of software and launsh now product in global market.


362

Sales (X) and Gross value added (Y) of TCS ltd. it is r1(x, y) = 0.97 that

shows higher degree correlation between Sales and Net Value Added.





RELIANCE INDUSTRIES LTD.

Sales (X) and Gross value added (Y) of Reliance Industries ltd. it is r1(x, y) =

0.90 that shows higher degree correlation between sales and Gross Value

Added. Significance of correlation will also be tested through Student T- Test

Hence, there is significant correlation between Sales and Gross Value Added,

it means when sales increase or decrease as well as gross value added also will

be increased or decreased, it shows that company increased their production

capacity and lunch a new product in marked.

Sales (X) and Gross value added (Y) of Reliance Industries ltd. it is r1(x, y) =

0.86 that shows higher degree correlation between Sales and Net Value


Hence, there is significant correlation between Sales and Net Value Added, it

means when sales increase or decrease as well as gross value added also will

be increased or decreased, The Highest growth in Net Value Added then later

year of study is attributable to the optimum utilisation of capacities,

improvement in operating efficiencies and successful marketing of products.

TATA MOTORS LTD.

Sales (X) and Gross value added (Y) of Tata Motors Ltd. it is r1(x, y) = 0.95





increased or decreased, it shows that amount of sales turnover continuously

increases that company innovative products developments and how products

lunch in market.


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Sales (X) and Gross value added (Y) of Tata Motors Ltd. it is r1(x, y) = 0.96





increased or decreased. . which was highest figure of Net Value Added for

study period higher growth rate in Net Value Added during the later year of

study is attributable to the optimum utilization of capataties improvement in

operateing efficiences and now innovation and successful marketing products.

BHARAT HEAVY ELECTRICALS LTD.

Sales (X) and Gross value added (Y) of Bharat Heavy Electricals Ltd. it is

r1(x, y) = 0.94 that shows higher degree correlation between sales and Gross

Value Added. Significance of correlation will also be tested through Student

T- Test Hence, there is significant correlation between Sales and Gross Value

Added, it means when sales increase or decrease as well as gross value added

also will be increased or decreased. It shows that Company increases their

production Capacity and lunch a new product in Global Market.

Sales (X) and Gross value added (Y) of Bharat Heavy Electricals Ltd. It is

r1(x, y) = 0.93 that shows higher degree correlation between Sales and Net


T- Test Hence, there is significant correlation between Sales and Net Value


also will be increased or decreased. The highest greatly in Net values Added

then later year of study its attributable to the optimum Utilization of

capacities, improvement in operating efficiencies and successful marketing at

products.

INDIAN OIL CORPORATION LTD.

Sales (X) and Gross value added (Y) of Indian Oil Corporation Ltd.it is r1(x,

y) = 0.80 that shows higher degree correlation between sales and Gross Value


Hence, there is significant correlation between Sales and Gross Value Added,


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it means when sales increase or decrease as well as gross value added also will

be increased or decreased.

Sales (X) and Gross value added (Y) of Indian Oil Corporation Ltd it is r1(x,

y) = 0.79 that shows higher degree correlation between Sales and Net Value


Hence, there is significant correlation between Sales and Net Value Added, it

means when sales increase or decrease as well as gross value added also will

be increased or decreased. It may be noted that the Highest growth in Net

Value Added. Then later year of study is attributable to the optimum

utilization of capacities, improvement in operating efficiencies now demand of

Petrol Chemicals Product days increasing that why growth Rate of Net Value

Added increased.

INFOSYS TECH. LTD.

Sales (X) and Gross value added (Y) of Infosys Tech. Ltd. it is r1(x, y) = 0.99






Sales (X) and Gross value added (Y) of Infosys Tech. Ltd. it is r1(x, y) = 0.99





increased or decreased. It was the highest figure of Net Value Added for the

study period higher growth in Net Value Added during the year of study is

attributes to optimum utilization of companies, improvement in operation

officiates and successful marketing of products.

STEEL AUTHORITY OF INDIA LTD.

Sales (X) and Gross value added (Y) of Steel Authority Of India Ltd. it is

r1(x, y) = 0.9997 that shows higher degree correlation between sales and Gross


365




also will be increased or decreased.

Sales (X) and Gross value added (Y) of Steel Authority Of India Ltd. it is

r1(x, y) = 0.9996 that shows higher degree correlation between Sales and Net




also will be increased or decreased.

OIL & NATURAL GAS CORPORATION LTD.

Sales (X) and Gross value added (Y) of Oil & Natural Gas Corporation Ltd. it

is r1(x, y) = 0.98 that shows higher degree correlation between sales and Gross




also will be increased or decreased. Higher growth in sale Turnover during the

later years of Study is attributable to the optimum utilisation of capacities,

improvement in operating officiencies and successful marketing of products.

Sales (X) and Gross value added (Y) of Oil & Natural Gas Corporation Ltd. it

is r1(x, y) = 0.94 that shows higher degree correlation between Sales and Net




also will be increased or decreased. Higher growth in NVA during the later

years of study is improvement in operating officiences and successful

marketing of products.

CChhaapptteerr:: 55

[[DDaattaa AAnnaallyyssiiss--IIII]]


366

AANNAALLYYSSIISS OOFF VVAALLUUEE AADDDDEEDD RRAATTIIOO

Value added information can be used to compute through various ratios. For

the value added trends of the company and to help in intercompany

comparison in between Private sectors and Public sector units, value added

ratios are calculated that findings as under:

There would be significant different in Gross Margin Ratio in between

the companies of selected private sector and public sector corporate units

during the study period. This ratio shows the contribution of firm‟s sales

income toward Value Addition. An effective sales management strategy

would enable a company to enhance this percentage. It also called The

Net Value Added per Rupee of Sale.

There would be significant different in the Fixed Assets Turnover Ratio

in between the companies of selected private sector and public sector

corporate units during the period of the study. This ratio shows the

relationship between Net Value Added to fixed Assets. If the Net Value

Added is more than Fixed Assets, it is considered good.

There would be significant different in the Capital Productivity Ratio in

between the companies of selected private sector and public sector

corporate units during the period of the study. This ratio indicates the

amount of Value – Added Generated per rupee of capital employed.

Greater the ratio higher will be social contribution. Following formula is

being used to find out ratio. It also called Value Added per Rupee of

Capital Employed.

There would be significant different in the Gross Value Added to Total

Revenue ratio in between the companies of selected private sector and

public sector corporate units during the study period. . It is must to say

that a higher proportion of Gross Value Added in Total Revenue will be

considered good and will show better social performance. It will also

show the utility added by the concern in the total efforts of the

organization and related parties

There would be significant different in the Net Value Added to Total

Revenue Ratio in between the companies of selected in private sector

and public sector corporate units during the study period. It may be said


367

that a higher proportion of Net Value Added in Total Revenue will be

considered good and will show better social performance. It can be

calculated by dividing the Net Value Added by the amount of Total

Revenue

There would be significant different in the Employees Benefit to Net

Value Added Ratio in between the companies of selected in private

sector and public sector corporate units during the study period. This ratio

indicates how much percentage of net value added remained for

employees after paying value for other group of society. It useful

measuring efficiency and utility of labour power of an enterprise.

There would be significant different in the Government Share to Net


sector and public sector corporate units during the study period. Every

corporate unit pays some value to government in form of Custom Duty

,Excise duty ,Income Taxes ,Wealth Taxes ,Rates and Taxes. This ratio

share how much percentage of government share to net value added.

There would be significant different in the Payment to shareholders to

Net Value Added Ratio in between the companies of selected in private

sector and public sector corporate units during the study period. Every

corporate unit has to pay dividend to its shareholders or providers of

capital. This ratio shows the earning management policy of the concern.

There would be significant different in the Payment to Lenders to Net


sector and public sector corporate units during the study period. This ratio

find out that how much percentage of Net Value Added is cost of capital.

This ratio represents efficiency or inefficiency of capital management.

The Retained Earning to Net Value Added Ratio in WIPRO,

CIPLA, RIL, TCS and TATA Motors, BHEL, IOC, Infosys,

SAIL,ONGC. Under study have been analyzed and calculated for the

study period which has been represented, there would be significant

different in the Retained Earning to Net Value Added Ratio in

between the companies of selected in private sector and public sector

corporate units during the study period.


368

The Retained Earning to Net Value Added Ratio in WIPRO,

CIPLA, RIL, TCS and TATA Motors, BHEL, IOC, Infosys,

SAIL,ONGC. Under study have been analyzed and calculated for the

study period which has been represented, there would be significant

different in the Depreciation to Revenue ratio in between the

companies of selected in private sector and public sector corporate

units during the study period.

66..33 CCOONNCCLLUUSSIIOONN

CChhaapptteerr:: 44

[[DDaattaa AAnnaallyyssiiss--II]]

AANNAALLYYSSIISS AANNDD IINNTTEERRPPRREETTAATTIIOONN OOFF VVAALLUUEE AADDDDEEDD SSTTAATTEEMMEENNTT

A study of Generation and Application of Net Value Added in selected

corporate units under study has noticed the following conclusions:

WWIIPPRROO TTEECCHH.. LLTTDD..

One of our concluded that Value Added generation and application

are ever during the study will be proved, because as per during the

study period generation of Value Added marked that Net Value

Added 240.80% in the year of 2009-10, due to charges in the various

segment of revenue and control on cost of bought in materials. The

main reason is behind on it company increase their software and

hardware launch new products.

Revenue from the sales marked continuously increased throughout the

study period. It increases 10667 crore to 27382 crore and

registered 240.80% growth during the study period.

Cost of brought in material and services significantly controlled by the

management especially in last five years that positively affects value

addition of the company.

Payment to Employee to Net Value Added registered continuously

increasing trend throughout the period of study. It increases 4385


369

crore to 10725crore and 64.07% to 68.75% during the period of

study.

Payment to the Government has been increased significantly during the

study period that shows social contribution by the company in way of

excise duty, custom duty and other taxes. It increases 457 crore to

1122crore.

Interest liability will be decrease during the years 2005-06 to 2008-

09after it increased later year.

In case of shareholders to Net Value Added ranged between 3.76% in

2008-09 to 10.42% in 2005-06.

Re-invest in business is the highest 21.90% in 2005-06 in form of

Retained Earnings. It is an appropriate amount for investment and

development point of view.

CIPLA LTD.






main reason is behind on it company increase their production and

launch new product.

Revenue from sales shows better performance. It increases 2898

crore to 5729 crore and registered 158.89% growth during the study

period.

Cost of bought in material and services significantly controlled by the



Payment to the Government has decreased significantly that shows

social contribution by the company in way of excise duty, custom duty

and other taxes.

Payment to Employees marked continuously increasing trend

throughout the period of study. The percentage of payment to


370

employees to NVA also increases 15.16% to 21.50% in year 2005-06

to 2009-10 remaining years.

Interest liability will be increased during the years 2005-06 to 2008-09

it increased the highest level in the year 2009-10.

In case of shareholders payment ranged between 10.18.% in 2005-06

to 16.64% in 2005-06 of Net Value Addition will be distributed by

company.

Re-invest in business is the highest 47.50% in 2009-10 in foam of

retained earnings. It is an appropriate amount for investment and


TATA CONSULTANCY SERVICES LTD.






main reason is behind on it company which was the highest figure of

Net Value Added for the study period higher growth in Net Value

Added during the year of study is attributable to the optimum

utilization of companies , improvement in operation efficiencies and

successful marketing of products

Revenue from the sales shows better growth. It increases 30029 crore

in 2009-10 and registered 230.16% growth during the study period.


management especially in first three years that positively affects value

addition of the company. It ranges between 29.31% in 2006-07 to

38.78% in 2007-08.

Payment to the employee toward Net Value Added registered

continuously increasing trend throughout the period of study. It ranged

4720 crore in 2005-06 to 10880 crore in 2009-10. However

percentage of ratio ranged between 56.65% in 2009-10 to 61.89% in

2006-07.


371

Payment to the Government has been increased significantly that

shows social contribution by the company in way of excise duty,

service taxes, custom duty and other taxes. It range between 603

crore in 2005-06 to 1860 crore in 2009-10.

Payment to Lender in form of Interest liability has been decrease first

three years regularly that shows bound liquidity position of company.

It ranged between 0.47% in 2005-06 to 0.56% in 2009-10.

Payment of Shareholders in form of dividend 11.05% average in

return of net value addition will be distributed by the company that

shows that company follows a conservative dividend policy during the

study period.

Re-invest in business range 12.65% in 2009-10 to 27.83% in 2005-06.

It is 22.11% average of the form of retained earnings.

RELIANCE INDUSTRIES LTD.






main reason is behind on it company the highest growth in Net Value

Added then later year of study is attributable to the optimum

utilisation of capacities, improvement in operating efficiencies and

successful marketing of products.

Revenue from sales shows better performance. It continuously

increasing 90938 crore up to 211727 crore in the years 2005-06

2009-10 respectively and registered 185.96% growth during the study

period.

Cost of bought in material and services significantly not controlled by

the management especially period of the study. It range 74.90% in

2005-06 to 82.27% in 2009-10.


372

Contribution of the Government has decreased significantly that shows

Company reduce social contribution by in way of excise duty, custom

duty and other taxes.

Payment to Employees has been increased 1469crore in 2005-06 to

3018crore in 2008-09. It shows that company declared many

incentive schemes for the employees.

Payment to Lenders inform of interest shows decreasing trend during

the study period except in the year 2009-10. It ranged been 4.06% in

2007-08 to 9.56% in 2008-09.

Payment of shareholder in form of dividend only 10.03% of Net Value

Addition by company that shows that company follows a conservative

dividend policy during the study period and most of the profit will be

retained for development activities.

Re-invest in business is 54.75% in the foam of Retained Earnings. It is

an appropriate amount for investment and development point of view.

TTAATTAA MMOOTTOORRSS LLTTDD..






main reason is behind on it company increase their production and

launch new product andwhich was highest figure of Net Value Added

for study period higher growth rate in Net Value Added during the

later year of study is attributable


crore in 2005-06 to 99971 crore in 2009-10 and registered 233.52%

growth during the study period.

Cost of Bought in Material and Services significantly net controlled by

the management especially in first two years and after increasing trend.

It ranged between 67.78% in 2005-06 to 81.91% in 2008-09.


373

Contribution of the Government continuously increasing trend during

the period of study except in the year 2008-09.It has been increases

significantly that shows good social contribution by the company.

Payment to Employees continuously increasing trend during the period

of the study. It increases 1777crore to 8752crorein 2005-06 and

2009-10 respectively.

Payment to Lender inform of interest continuously increasing trend in

remaining years during the study period. So that interest liability will

be increased regularly that shows not bound liquidity position of

company and not collective management of long-term debt during the

study period.

In case of Payment to shareholder only 6.29% of net value addition

will be distributed by company that shows that company follows a

conservative divided policy during the study period.

Re-invested in business increasing trend during the year 2005-06 to

2009-10 suddenly it comes down in the year 2008-09. In the year

2008-09 it used to reserve and surplus because it has established many

branches and used to fund in development.

BHARAT HEAVY ELECTRICALS LTD.






main reason is behind on it company increase the highest greatly in

Net values Added then later year of study its attributable to the

optimum Utilization of capacities, improvement in operating

efficiencies and successful marketing at products.

Revenue from the sales marked continuously increased throughout the

study period. It increases 16037 crore to 36036 crore and

registered 237.19% growth during the study period.


374




Payment to Employee to Net Value Added registered continuously

increasing trend throughout the period of study. It increases 1879

crore to 6449 crore and 24.28% to 42.43% during the period of

study.

Payment to the Government has been increased significantly during the

study period that shows social contribution by the company in ay of

excise duty, custom duty and other taxes. It increases 931 crore to

2518crore.

Interest liability will be decrease during the years 2005-06 to 2008-09

after it increased later year.

In case of shareholders to Net Value Added ranged between 5.54% in

2005-06 to 7.81% in 2008-09.

Re-invest in business is the highest 52.83% in 2006-07 in form of

Retained Earnings. It is an appropriate amount for investment and


INDIAN OIL CORPORATION LTD.





segment of revenue and is not control on cost of bought in materials.

It may be concluded that the Highest growth in Net Value Added.

Then later year of study is attributable to the optimum utilization of

capacities, improvement in operating efficiencies now demand of

Petrol Chemicals Product days increasing that why growth Rate of Net

Value Added increased.


crore to 343241 crore and registered 134.64% growth during the

study period.


375

Cost of bought in material and services significantly controlled by the



Payment to the Government has decreased significantly that shows

social contribution by the company in way of excise duty, custom duty

and other taxes.

Payment to Employees marked continuously increasing trend

throughout the period of study. The percentage of payment to

employees to NVA also increases 4.16% to 8.98% in 2005-06 to

2009-10 remaining years.

Interest liability will be increased during the years 2005-06 to 2008-09

it decreased the lowest level in the year 2009-10.

In case of shareholders payment ranged between 0.96% in 2007-06 to

16.64% in 2005-06 of Net Value Addition will be distributed by

company.

Re-invest in business is the highest 47.50% in 2009-10 in foam of

retained earnings. It is an appropriate amount for investment and


INFOSYS TECH. LTD.

One of our concluded that Value Added generation and application are

ever during the study will be proved, because as per during the study

period generation of Value Added marked that Net Value Added

261.49% in the year of 2007-08, due to charges in the various segment

of revenue and control on cost of bought in materials. The main reason

is behind on it company increase their production and launch new

product. Especially amount of Depreciation will increased significantly

due to expansion and development activities it shows significant

contribution by the company towards society

Revenue from the sales shows better growth. It increases 22742 crore

and registered 261.49% growth during the study period.


376


management especially in first four years that positively affects value

addition of the company. It ranges between 12.51% in 2009-10 to 16.84%

in 2005-06.

Payment to the employee toward Net Value Added registered continuously

increasing trend throughout the period of study. It ranged 4802 crore in

2005-06 to 12091crore in 2009-10. However percentage of ratio ranged

between 60.88% in 2009-10 to 62.28% in 2008-09.

Payment to the Government has been increased significantly that shows

social contribution by the company in way of excise duty, service taxes,

custom duty and other taxes. It range between 415crore in 2005-06 to

1921crore in 2009-10.

Payment to Lender in form of Interest liability has been increase first two

years regularly that shows bound liquidity position of company. It ranged

between 0.01% in 2009-10 to 0.19% in 2005-06.

Payment of Shareholders in form of dividend 9.99% average in return of

net value addition will be distributed by the company that shows that

company follows a conservative dividend policy during the study period.

Re-invest in business range 14.85% in 2005-06 to 31.71% in 2007-08. It

is 21.79% average of the form of retained earnings.

STEEL AUTHORITY OF INDIA LTD.

One of our concluded that Value Added generation and application are

ever during the study will be proved, because as per during the study

period generation of Value Added marked that Net Value Added

186.27% in the year of 2007-08, due to charges in the various segment of

revenue and control on cost of bought in materials. The main reason is

behind on it company increase their production and launch new product.

Revenue from sales shows better performance. It continuously increasing

37410 crore up to 55066crore in the years 2005-06 and 2008-09

respectively and registered 186.28% growth during the study period.


377

Cost of bought in material and services significantly under controlled by the

management especially period of the study. It range 52.29% in 2006-07 to

38.18% in 2007-08.

Contribution of the Government has decreased significantly that shows

Company reduce social contribution by in way of excise duty, custom duty

and other taxes.

Payment to Employees has been increased 4204crore in 2005-06 to

8502crore in 2008-09. It shows that company declared many incentive

schemes for the employees.

Payment to Lenders inform of interest shows decreasing trend during the study

period except in the year 2009-10. It ranged been 0.94% in 2008-09 to 2.79%

in 2005-06.

Payment of shareholder in form of dividend only 7.69% of Net Value

Addition by company that shows that company follows a conservative

dividend policy during the study period and most of the profit will be retained

for development activities.

Re-invest in business is 40.22% in the form of Retained Earnings. It is an

appropriate amount for investment and development point of view.

OIL & NATURAL GAS CORPORATION LTD.

One of our concluded that Value Added generation and application are ever

during the study will be proved, because as per during the study period

generation of Value Added marked that Net Value Added 127.87% in the

year of 2008-09, due to charges in the various segment of revenue and control

on cost of bought in materials. The main reason is behind on it company

increase their production and launch new product.Higher growth in NVA

during the later years of study is improvement in operating officiences and

successful marketing of products

Revenue from sales shows better performance. It increases 78044 crore in

2005-06 to 114191crorein 2008-09 and registered 127.87% growth during the

study period.


378

Cost of Bought in Material and Services significantly controlled by the

management especially in first three years and after increasing trend. It

ranged between 47.19% in 2006-07 to 51.12% in 2008-09.

Contribution of the Government continuously increasing trend during

the period of study except in the year 2009-10.It has been increases

significantly that shows good social contribution by the company.

Payment to Employees continuously increasing trend during the period

of the study. It increases 1367crore to 2380 crore in 2005-06 and

2006-07 respectively.

Payment to Lender inform of interest continuously increasing trend in

remaining years during the study period. So that interest liability will

be increased regularly that shows not bound liquidity position of

company and not collective management of long-term debt during the

study period.

In case of Payment to shareholder only 19.44% (Highest figure) of net

value addition will be distributed by company that shows that company

follows a conservative divided policy during the study period.

Re-invested in business increasing trend during the year 2005-06 to

2008-09 suddenly it comes down in the year 2009-10. In the year

2008-09 it used to reserve and surplus because it has established many

plants and used to fund in development.

CChhaapptteerr:: 55

[[DDaattaa AAnnaallyyssiiss--IIII]]

AANNAALLYYSSIISS OOFF VVAALLUUEE AADDDDEEDD RRAATTIIOO

Value added information can be used to compute through various ratios. For the value

added trends of the company and to help in intercompany comparison in between

Private sectors and Public sector units, value added ratios are calculated that and

conclusions as under:

The five years average of the Gross Margin Ratio showed fluctuating trend

in selected corporate units. It would be comparison between private sector


379

units and public sector units amongst private sector unit as Infosys Ltd.

was the highest level at 83.72% average during the study period.

The five years average of the Fixed Assets Turnover Ratio different

figure between among of selected private sector and public sector

corporate units It ranged in Private Sector unit as 4.14 Crore in Infosys

Ltd. and Public Sector as 3.02 Crore average during the study period.

It may be concluded that the Capital Productivity Ratio in selected

private sector and public sector corporate units was five years average of

this ratio the highest average of in private sector as TATA Consultancy

Services Ltd and in Public Sector as Bharat Heavy Electricals Ltd.

Both companies same figure at 1.14 crore in above findings Very well that

higher social contribution toward society.

The five years average of the Gross Value Added to Total Revenue

Ratio in selected private sector and public sector corporate units during

the study period recorded different figure between among selected

corporation units. It reached the highest level in private sector units at

85.65% in Infosys Tech. Ltd.

The five years average of the Net Value Added to Total Revenue Ratio

noted fluctuating figure in selected in private sector and public sector

corporate units among selected corporate units. It showed the highest level

at 81.28% in Private Sector unit as Wipro Tech. Ltd.

The five years Average of Employees Benefit to Net Value Added Ratio in

between the companies of selected in private sector and public sector

corporate units marked fluctuating figure of among selected corporate

units. It was the highest level at 65.30% in Private Sector unit as Wipro

Tech. Ltd.

The five years average of Government Share to Net Value Added Ratio

in between the companies of selected in private sector and public sector

corporate units recorded fluctuating figure of among selected corporate

units. It ranged between private sector units the lowest figure at 6.23% in

Wipro Tech. Ltd. and in Public sector unit the highest figure at 44.79%

in Indian Oil Corporation Ltd.


380

The five years average of Payment to Shareholders to net value added

ratio in between the companies of selected in private sector and public

sector corporate units showed fluctuating figure of among selected

corporate units. It ranged between in public sector unit the lowest

figure 2.62% in Indian Oil Corporation Ltd. to the highest figure

17.35% in Oil & Natural Gas Corporation Ltd.

The five years average of the Payment to Lenders to Net Value

Added Ratio in between the companies of selected in private sector

and public sector corporate units registered fluctuating figure of among

selected corporate units. It was the lowest figure in private sector at

0.08% in Infosys Tech. Ltd. and the highest figure of 5.88% in

Reliance Industries Ltd.

The five years average of the Retained Earning to Net Value Added

Ratio in between the companies of selected in private sector and

public sector corporate units recorded fluctuating trend of among

selected units. It was the highest figure at 46.50% in Bharat Heavy

Electricals Ltd in public sector unit. And the lowest figure at 9.53%

in TATA Motors Ltd in private sector unit.

On the basis of the above analysis it may be concluded that average of

the Depreciation to Total Revenue ratio in selected private sector

and public sector corporate units showed that highest level at

13.69(Average) percent in Oil & Natural Gas Corp. Ltd. in public

sector unit. It showed higher proportion to depreciation in business.


381

66..44 SSUUGGGGEESSTTIIOONNSS::

The mandatory suggestions to Wipro Tech. Ltd., Cipla Ltd., TCS Ltd.,

Reliance Industries Ltd., and Tata Motors Ltd. Bharat heavy Electricals Ltd.,

Indian Oil Corporation Ltd., Infosys Tech. Ltd., Steel Authority of India Ltd., and

Oil & Natural Gas Corporation Ltd. Are given below:

The companies should try to reduce their Cost of Bought in materials to

maximum their Net Value Added Both Private Sector and Public Sector.

The companies should also reduce cost of services like administration,

marketing and other expenses to meet the highest Net Value Added.

The Excise duty & other taxes on industries which have been continuously on

the rise during the study period should be lowered down by the central

government so that cost of production and selling price of industries products

can be reduced and thus sales of industries products & services can be further

promoted.

The companies should reduce individual expenses by reducing these expenses

companies can transfer more amounts to Retained In Business.

The companies should try to reduce borrowed fund & long-term debt because

interest liability also reduce point of view especially to Reliance Industries Ltd

and TATA Motors Ltd.

The companies should try to increase rate of dividend because dividend is part

of Earning and create good image in marked especially to Indian Oil

Corporation Ltd. in public sector unit.

The companies should try to increase more Benefit to Employees to motive

through incentive schemes or bonus schemes especially Reliance Industries

Ltd in Private Sectors and in Government enterprise Oil & Natural Gas

Corporation should try to keep Employees welfare among compare to among

selected units.

The companies should try to increase their exports-imports. This can be done

with the support of government which should allow export incentives to the

companies.

CHAPTER-6 FII NNDDIINGGSS,, TCCOONCCLLUUSSIOONNS...

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